How to Get a Loan for a Manufacturing Business in 5 Steps

Running a manufacturing business often requires significant upfront and ongoing capital. From purchasing machinery and raw materials to staffing production lines and managing large orders, access to reliable funding is essential to maintain operations and scale efficiently.

Fortunately, there are a range of business loan options designed specifically for the manufacturing industry. Whether you’re launching a new facility, upgrading equipment, or managing cash flow, the right financing can help you stay competitive and grow sustainably.

In this guide, we’ll cover five key steps to help you secure a manufacturing business loan. You’ll learn how to define your financing needs, explore loan types, understand eligibility criteria, and choose a lender that aligns with your long-term goals.

1. Determine Your Financing Needs

Before applying for a loan, it’s important to clearly define what you need funding for and how much capital your manufacturing business requires. Whether you’re scaling production, upgrading your facility, or covering ongoing expenses, outlining your needs will help you choose the right financing option and strengthen your application.

Common Reasons for Manufacturing Business Loans

Manufacturers face a variety of capital needs depending on their size, product line, and production model. Here are some of the most common use cases:

Equipment and Machinery

Purchasing or upgrading manufacturing equipment—such as CNC machines, conveyor belts, or robotics—often involves a large upfront investment. Financing allows you to spread out the cost without disrupting your cash flow.

Facility Expansion or Renovation

Growing production capacity may require remodeling or expanding your existing facility. A loan can help fund construction, utility upgrades, and necessary infrastructure improvements.

Inventory and Raw Materials

Managing bulk orders of raw materials can strain working capital. Financing enables you to secure critical inventory without delaying production schedules.

Labor and Staffing Costs

Hiring skilled labor or training existing staff for new processes can be expensive. Short-term loans or lines of credit can help you cover payroll during ramp-up periods.

Cash Flow Gaps

With long production timelines and delayed receivables, many manufacturers use financing to bridge cash flow gaps and maintain steady operations between payments.

2. Types of Manufacturing Business Loans

Manufacturing companies have access to a wide range of financing options designed to support capital-intensive operations. Whether you’re investing in equipment, expanding production, or managing day-to-day costs, the right loan type can help you reach your business goals more efficiently.

Equipment Financing

Equipment financing is ideal for purchasing machinery and production tools. The equipment itself typically serves as collateral, which can make qualification easier.

• Loan Amounts: Up to 100% of the equipment’s value
• Uses: CNC machines, robotics, assembly lines, packaging systems, or other manufacturing tools
• Terms: Typically 3 to 7 years, depending on the expected lifespan of the equipment

SBA 7(a) Loans

SBA 7(a) loans are government-backed loans that offer competitive interest rates and longer repayment terms, making them a good fit for manufacturers with long-term investment plans.

• Loan Amounts: Up to $5 million
• Uses: Facility expansion, working capital, refinancing, or equipment purchases
• Terms: Up to 10 years for working capital or equipment; up to 25 years for real estate

Term Loans

Term loans provide a lump sum of funding that’s repaid over a fixed schedule. They’re a good option for specific projects with defined costs and timelines.

• Loan Amounts: Varies based on credit, business profile, and lender
• Uses: Renovations, technology upgrades, bulk material purchases, or growth initiatives
• Terms: Typically 1 to 10 years, with fixed or variable interest rates

Business Line of Credit

A business line of credit gives manufacturers flexible access to funds that can be used as needed. This is especially useful for covering short-term expenses or navigating seasonal demand.

• Credit Limits: Based on annual revenue and business credit
• Uses: Raw materials, payroll, maintenance, or gap financing during delayed receivables
• Terms: Revolving credit; interest is only paid on the amount drawn

3. Assess Your Eligibility

Understanding the criteria lenders use to evaluate manufacturing loan applications can help you prepare stronger documentation and improve your chances of approval. While specific requirements vary by lender and loan type, most will assess your business’s financial health, industry experience, and ability to manage debt.

Credit Score

Both personal and business credit scores are considered. A higher score increases your likelihood of approval and may lead to more favorable loan terms. Traditional lenders may require a score of 680 or higher, while alternative lenders may work with lower scores.

Time in Business

Most lenders prefer to work with manufacturing businesses that have at least one to two years of operating history. If you’re launching a new facility, you may still qualify for certain loan types if you can provide a strong business plan and financial projections.

Annual Revenue

Lenders will evaluate your business’s top-line revenue to determine your repayment capacity. Many loan programs require a minimum annual revenue threshold, which is often between $100,000 and $250,000.

Profit Margins and Cash Flow

Manufacturing operations can be capital-intensive, so lenders will look closely at your profit margins and cash flow to ensure you can manage both day-to-day expenses and loan repayments.

Collateral (When Required)

For equipment financing or larger loans, you may be asked to provide collateral such as machinery, inventory, or business property. This can improve your loan terms and increase your approval odds.

4. Choose the Right Lender

Once you’ve identified your financing needs and assessed your eligibility, the next step is choosing a lender that understands the complexities of the manufacturing industry. From traditional institutions to specialized lenders, each option comes with its own advantages.

Traditional Banks

Banks typically offer low interest rates and long repayment terms, making them a good fit for established manufacturers with strong credit. However, approval can take several weeks and often involves extensive paperwork and strict qualifications.

Online and Alternative Lenders

Alternative lenders offer faster application processes and more flexible approval criteria. They’re often ideal for manufacturers seeking short-term funding, working capital, or faster access to cash without the lengthy wait associated with banks.

Industry-Specific Lenders

Some lenders, such as SBG Funding, focus on financing industrial and manufacturing operations. These lenders may offer specialized loan products for equipment, materials, or facility upgrades—and often have a deeper understanding of the production lifecycle and cash flow challenges.

5. Gather Your Documents and Apply

Once you’ve chosen the lender and loan product that fits your manufacturing business, the final step is to prepare your application. Submitting complete, accurate documents can speed up the process and improve your chances of approval.

Common Documents You’ll Need

Most lenders will require the following materials as part of the loan application:

• Business Bank Statements: Typically the most recent 3 to 6 months
• Tax Returns: Personal and business returns from the past 1 to 2 years
• Profit and Loss Statement: A detailed view of your business’s income and expenses
• Balance Sheet: An overview of your current assets, liabilities, and equity
• Equipment Quotes or Invoices: Required if you’re financing machinery or tools
• Business License or Manufacturing Certifications: Proof that your company is licensed and compliant with industry regulations
• Personal Identification: Such as a government-issued ID

In some cases, lenders may also request your production schedule, inventory reports, or details on your supply chain—especially if your loan is tied to fulfilling a large contract or scaling up operations.

Once submitted, funding timelines can vary by lender. Alternative lenders may approve and fund within days, while traditional banks could take several weeks. Be ready to answer follow-up questions and review all loan terms carefully before signing.

Flexible Term Loans for Manufacturing Businesses from SBG Funding

Whether you’re upgrading your facility or scaling production to meet demand, SBG Funding offers tailored term loan solutions designed for the manufacturing industry. Our fast and flexible financing helps you invest in equipment, inventory, and workforce without slowing down operations.

Why Choose SBG Funding?

• Quick Approvals: Get a decision in as little as 24 hours.
• Tailored Loan Options: Use funds for machinery, raw materials, staffing, or facility improvements.
• Transparent Terms: No hidden fees and competitive rates.

How to Apply

1. Apply Online: Complete our short application in minutes.
2. Get a Fast Decision: We’ll review your request and respond within 24 hours.
3. Receive Funding: Approved funds can be in your account as soon as the same day.

Applying won’t affect your credit score. Get the capital your manufacturing business needs without the delays.